...The Americans, meanwhile, have met the enemy, and it is them. America has coasted on a quarter-century wave of power and prosperity since president Reagan won the Cold War and restarted the economy. America in the 1980s was the only model to be emulated, and a magnet for global capital flows. So compelling were American capital markets that by the late 1990s, almost all the free savings of the world sought an American home. In 2007 a trillion dollars of overseas capital poured into American markets...
...The second occasion on which nothing happened was, of course, the present subprime disaster. The world learned that it was dangerous to buy risky American assets and chose instead to buy safe ones. The trouble was that as a whole, the American public was engaged in extremely risky behavior, that is, bidding up home prices with cheap credit. The banks and credit rating agencies declared that a basket of very risky assets could be turned into a very safe asset, by selling off the part of the risk to speculators. This exercise turned out to fall somewhere between the delusional and the fraudulent, as subprime securities rated AA, the next-to-highest credit grade, now trade at only 40 cents on the dollar.
One can excoriate the regulators who let this happen, or the banks who skimmed fat commissions from the market, but the driver of both the Internet bubble and the subprime bubble was the same: the desire of the Americans to get something for nothing. Americans mistook the one-time windfall ensuing from the Reagan revolution for a Tischlein-Deck-Dich, the magic table of the Grimm fairy tale that on command lays out a marvellous meal...
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Very thoughtful article. We don't need a Putin though; we need a Dr. Ron Paul.
He's not gonna get the Republican nomination. Hopefully, he will continue as an independent.
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